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Poultry Processers to Pay $85m for Alleged Wage-Fixing

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Poultry processors will pay $85 million to workers who were affected by an alleged wage-fixing scheme.

Santa Clara, CAThree poultry processors and a consulting firm have agreed to pay $85 million to plant workers who were affected by an alleged wage-fixing scheme, the Department of Justice (DoJ) announced. Cargill, Wayne Farms and Sanderson Farms (now Wayne-Sanderson Farms) were accused by the DOJ of suppressing worker pay at the plants and using deceptive tactics against poultry growers.

“Through a brazen scheme to exchange wage and benefit information, these poultry processors stifled competition and harmed a generation of plant workers who face demanding and sometimes dangerous conditions to earn a living,” said Doha Mekki, principal deputy assistant attorney general of the Justice Department’s Antitrust Division.

DoJ’s  Lawsuit

The DOJ’s lawsuit alleged a “long-running conspiracy to exchange information about wages and benefits for poultry processing plant workers and collaborate with their competitors on compensation decisions,” a violation of the Sherman Antitrust Act. The DOJ announced the settlement terms with Cargill as well as Sanderson Farms and Wayne Farms, along with data consulting firm WMS Webber Meng Sahl & Co. and its president, G. Jonathan Meng, for facilitating the alleged scheme to share details about processing plant workers' wages and benefits.

As well, DoJ alleged that Sanderson Farms and Wayne Farms violated the Packers and Stockyards Act by engaging in deceptive practices associated with the “tournament system,” which pits chicken growers against each other to determine their compensation.
"Additionally, the proposed consent decree with Sanderson Farms and Wayne Farms would resolve alleged violations of the Packers and Stockyards Act, which prohibits, among other things, deceptive practices in poultry markets," said the DOJ, which faulted the companies for a payment system based on how growers perform compared with other growers, even though the processors themselves "control nearly all the key inputs, including the chicks delivered to the growers and their poultry feed, that often determine a grower's success."

Terms of the Deal

The proposed consent decree with defendant poultry processors Cargill, Sanderson Farms and Wayne Farms would prohibit them from sharing competitively sensitive information about poultry processing plant workers’ compensation. It would also:
  • Impose on the poultry processors a court-appointed compliance monitor who, for the next decade, will ensure their compliance with the terms of the proposed decree;
  • Grant the court-appointed monitor broad authority to ensure their compliance with all federal antitrust laws as they relate to their poultry processing facilities, workers at their poultry processing plants, chicken growers, integrated poultry feed, hatcheries, transportation of poultry and poultry products, and the sale of poultry and submit regular reports on the processors’ antitrust compliance;
  • Permit the Antitrust Division to inspect the processors’ facilities and interview their employees to ensure compliance with the consent decree; and
  • Require the companies to commit to pay $84.8 million, collectively, in restitution for poultry processing plant workers who were harmed by the information exchange conspiracy.
These terms would expire 10 years after the consent decree is approved by the court, reported the National Law Revue.

Bloomberg Law reported that, just a few days before the settlement in July 2022, Sanderson Farms was acquired for $4.5 billion via joint venture between Cargill and Continental Grain Co. Wayne Farms was already owned by Continental. The acquisition combined the third and sixth-largest companies in U.S. chicken production to form the new Wayne-Sanderson Farms company. Before they were merged, Sanderson Farms and Wayne Farms annually were generating approximately $3.56 billion and $2.2 billion, respectively.

The DOJ’s investigation is ongoing, and is currently looking into several unnamed co-conspirators.  This lawsuit was filed in federal court in Maryland (U.S. v. Cargill Meat Solutions Corp., et al., No. 1:22-cv-01821 D. Md.).


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